China’s state-owned media might talk tough, but major tech companies are fleeing the country due to Beijing’s unfair trade practices, national security concerns, continued economic warfare with the United States and rising labor costs. (Related: Proof Trump is Winning the Trade War with China)
The Nikkei Asian Review reported Wednesday that HP, Dell and Microsoft are joining Amazon, Google, Apple and other tech giants in moving production out of China.
HP and Dell, the world’s No. 1 and No. 3 personal computer makers who together command around 40% of the global market, are planning to reallocate up to 30% of their notebook production out of China, several sources told the Nikkei Asian Review.Nikkei Asian Review – 7/3/19
Microsoft, Google, Amazon, Sony and Nintendo are also looking at moving some of their game console and smart speaker manufacturing out of the country, multiple sources told the Nikkei Asian Review. Other leading PC makers such as Lenovo Group, Acer and Asustek Computer are also evaluating plans to shift, according to people familiar with the matter.
The recent trade truce between China’s President Jinping and President Trump has apparently not comforted the tech manufacturers.
Tech companies’ plans, spurred by the bitter trade battle between Washington and Beijing, have not changed despite the truce that was struck between U.S. President Donald Trump and Chinese President Xi Jinping at last weekend’s Group of 20 summit in Osaka.
Not all are leaving for economic reasons, some cite national security and wage inflation as key reasons to flee China.
Builders of key data center servers — Quanta Computer, Foxconn Technologyand Inventec — have all moved some production out of China to Taiwan, Mexico and the Czech Republic to avoid the threat of additional tariffs and to assuage customer concerns over U.S. claims of potential national security risks. “After the tariffs on Chinese goods … took effect on Sept. 24, we started to manufacture and ship servers outside of China from October,” said an executive of a Taiwanese server manufacturer.
China depends heavily on the computer and technology gadget manufacturing sector to keep it’s struggling economy afloat. As more companies move their production to U.S.-friendly countries like Taiwan and Mexico, China will have to decide whether to trade fairly with the United States or risk losing its status as the world’s largest technology manufacturer.
China is losing the trade war with America, and it is unlikely that they can fix what they alone broke.